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Throughout the ages, money has undergone more reinventions than Madonna. Its latest guise, programmable cryptocurrency, enables the secure flow of money without the need for institutional oversight, explains MIT researcher Neha Narula. getAbstract recommends Narula’s clear-cut introduction to the basics and potential of cryptocurrencies to the uninitiated who are curious about the latest innovations in finance.

In this summary, you will learn

How cryptocurrencies have evolved,

How they work, and

How digital currencies will change the way people and companies conduct transactions and assign value.

About the Speaker

Neha Narula is the director of cryptocurrency research at the Digital Currency Initiative at MIT Media Lab.

Summary

The traditional currency of the Yap people of Micronesia was Rai stones, limestone discs that weighed up to four tons and measured as much as 12 feet wide. The Yap couldn’t physically exchange the stones, so they recorded who owned what part of each stone. The stones weren’t “inherently valuable,” but the Yap people collectively agreed that they were. Likewise, the value of paper money or coins relies on a subjective shared understanding. Nowadays, people commonly transact using digital money: For example, your paycheck lodges directly into your bank account, you pay your bills and taxes online, and your pension contributions automatically come out of your salary. Physical money never changes hands; computers simply change ones and zeros that large institutions underwrite. Yet “friction” is pervasive within the system. For instance, transferring money abroad is costly, and many credit cards don’t work in all nations. “Gatekeepers,” such as banks or credit card companies, control access to the digital financial system. These services aren’t seamlessly compatible, which stymies innovation and makes banking unwieldy and expensive.